China Dairy listed on the Australian Exchange in April 2016. The company's IPO was not a success with its share price losing over 70% of its value over the next 18 months. In December 2017, the ASX suspended trading in the company's shares pending a response to its enquiries. Concerns centred on the participation of an individual who appeared to be acting as a shadow director, an allegation the company denied. In February 2018, the board released a review of its corporate governance and recommended changes including the appointment of independent directors which would comprise the majority of the board. However, in May, the company's CEO (who had been removed from the board) requested an EGM at which he would replace the board. He was subsequently fired the next day for performance issues. The company was then informed by its auditors that it had lost control of a major subsidiary. After initially refusing the request for an EGM, in June the board was forced to accept it on the basis that the company was regulated by Hong Kong, not Australian, law. The directors resigned later that month and shortly thereafter the new directors were appointed, including the former CEO. The ASX delisted the company in July 2018, citing corporate governance issues. Although there were no allegations that China Dairy was faking its profits, the cancellation of its dividend despite ample cash flows and cash balances must raise suspicions. Our screens indicate that the company's financials had traits similar to prior frauds.

Last updated May 2022

The information on this page has been compiled from publicly available sources. GMT Research Limited has not verified the information and does not warrant its accuracy. Any claims made or views expressed are not necessarily those of GMT Research Limited.